In the first half of 2021, PTA followed the rise of crude oil, and the market price once rose to the highest level since October 2019. PTA production capacity has reached a new high, processing fees for overcapacity have dropped, and the PTA industry has accelerated the survival of the fittest. In the first half of the year, domestic new parking and difficult-to-restart production capacity was 5.44 million tons, an increase of 148.4% compared with 2020.
Market price high within one and a half years
In the first half of the year, the market price of PTA followed the rise of crude oil and rose to the highest level since October 2019. As of June 29, the average price of PTA in East China in the first half of the year increased by 591 yuan/ton (+16%) compared with the first half of last year.
Against the backdrop of global loose monetary policy and production cuts by major oil-producing countries, international crude oil prices continued to hit highs since October 2018 in the first half of the year. As of June 29, the average closing price of Brent crude oil in the first half of the year increased by US$23/barrel (+54%) compared with the first half of last year. Crude oil has surged, and the cost has pushed up PTA. According to Zhuochuang Information’s PTA production cost calculation model, as of June 29, the average daily production cost of PTA in the first half of the year was 4,579 yuan/ton, an increase of 814 yuan/ton from the average in the first half of last year ( +22%). The market price of PTA follows the rise of crude oil. However, overall, the average PTA market price in the first half of the year increased by only 16%, which was far lower than the 54% of crude oil and 36% of PX. This was mainly due to the negative supply side of PTA during the rapid expansion cycle. Due to market sentiment, the market price of PTA is under pressure and it is difficult to follow the rise of crude oil smoothly. The increase in raw materials is greater than that of PTA, which also squeezes PTA processing fees.
Processing fees are at a 5-year low
PTA production capacity and social inventory hit record highs in the first half of the year , and under supply pressure, PTA processing fees once fell to a low in nearly five years.
In the first quarter, a total of 4.9 million tons of new PTA production capacity was put into production in Baihong and Honggang, and the effective PTA production capacity reached 61.855 million tons, a record high. The pressure on the supply side has increased. In the traditional off-season for demand around the Spring Festival, the operating load of downstream polyester is low and demand has weakened. In February, PTA social inventory rose to 4.2951 million tons, a record high. New high production capacity and social inventory have squeezed PTA processing fees. As of June 29, the average daily PTA processing fee in the first half of the year was 409 yuan/ton, a decrease of 223 yuan/ton (-35%) compared with the first half of last year. Among them, the monthly average PTA processing fee in March was 335 yuan/ton, falling to the lowest level since July 2016.
Under the rapid expansion cycle of PTA, the expansion speed of PTA is much higher than that of downstream polyester. In the first half of the year, the industrial chain processing fees were transferred to downstream polyester. In the first half of the year, The average theoretical profit and loss is: PTA has a loss of 191 yuan/ton, polyester filament POY has a profit of 500 yuan/ton, polyester filament FDY has a profit of 324 yuan/ton, polyester staple fiber 1.4D has a profit of 276 yuan/ton, and polyester bottle flakes have a profit of 154 yuan. /Ton.
The price of auxiliary material acetic acid has reached a record high this year. According to the production cost of PTA per ton, 30- Calculating 36.5 kilograms of acetic acid, the average monthly cost of acetic acid consumption in the first half of the year was 222 yuan/ton, and the total cost of PTA packaging was about 264 yuan/ton, while the average PTA processing fee in the first half of the year was only 409 yuan/ton, after excluding acetic acid and PTA packaging costs. The remaining PTA processing fee is about 145 yuan/ton, which cannot cover depreciation, energy consumption, labor and other costs in the production process. Some small PTA factories use about 39 kilograms of acetic acid per ton of PTA produced. The high price of acetic acid puts greater cost pressure on small PTA factories.
Maintenance capacity reaches record high
Low processing fees accelerate the survival of the fittest in the PTA industry. In the first half of the year, the newly added PTA production capacity that was parked and difficult to restart increased significantly. PTA production capacity reached a new high due to maintenance and production cuts. Some backward PTA production gave way to market share. The PTA industry is concentrated. degree increase.
The cost pressure of the PTA industry in the first half of the year was extremely high. In the first half of the year, the industry was in the following mode: overcapacity (accumulated inventory) – falling processing fees (production losses) – overhaul Or long-term parking (some companies lose market share) – some devices are difficult to restart (cost pressure or capital chain problems) – PTA companies will go from small to large (industry concentration increases).
In 2021, the domestic new parking capacity will be 5.44 million tons, an increase of 148% compared with 2020. So far in 2020, domestic PTA production capacity, which is difficult to restart after shutdown, has reached 7.63 million tons, accounting for 12.3% of the effective production capacity in 2021. Parking PTA production capacity mainly includes two types: old and small PTA devices, and PTA devices lacking upstream and downstream supporting facilities. The main characteristics of them are production losses. Under the industry cycle of rapid PTA capacity expansion and low processing fees, these production capacities have hardly turned a profit. The possibility of profit.
PTA maintenance and production reduction capacity reached a record high in the first half of the year, and PTA production capacity reached a record high in February and March. Theoretical production losses are large, and PTA social inventory hit a record high in February. PTA factories have stepped up maintenance and production reduction efforts since March, and PTA maintenance and production reduction capacity reached a record high in April. In April, PTA’s maintenance and production reduction capacity was 24.73 million tons, an increase of 16.79 million tons (+211.5%) compared with April last year. The output lost due to maintenance and production reduction was 1.284 million tons, an increase of 916,000 tons (+249.1%) compared with April last year.
Demand is at the highest point in the same period in the past four years
Downstream polyester production load in the first half of the year is at the highest point in the same period in the past four years, and the demand for PTA is stable . The overall pattern is that the demand for textile and clothing products has increased after the peak of the global epidemic. Customs data shows that my country’s cumulative export volume of textiles and clothing from January to May 2021 was US$112.692 billion, a year-on-year increase of 15.03%. From a small perspective, the concentration of my country’s polyester industry has increased. Under the premise of polyester profit preference in the first half of the year, polyester factories controlled inventory pressure through pulsed high production and sales. In particular, the main polyester factories maintained high operating rates, so the The overall operating load of the polyester industry was relatively high in the first half of the year.
PTA prices may rise first and then fall low in the second half of the year
In the second half of the year, there is a game between the positive cost side of PTA and the negative side of the supply side. The short-term positive cost side has the upper hand, but the mid-term supply-side pressure restrains the PTA market growth. It is estimated that PTA prices may rise in the second half of the year. Back low.
Cost side: On the premise that the global loose monetary policy has not reached an inflection point and the major oil-producing countries have not significantly increased production, crude oil is expected to remain relatively strong in the second half of the year. trend. The average monthly processing fee of PTA is not high. The increase in oil prices will be transmitted to PTA very quickly, and the cost supports PTA.
Supply side: Under the rapid capacity expansion cycle, PTA’s new production capacity seizes the market share of backward production capacity. Although the shutdown of some backward production capacity has temporarily alleviated the PTA supply pressure, PTA The general pattern of capacity expansion being much faster than that of downstream polyester has not changed. It is expected that PTA will return to the stage of rapid inventory accumulation in the third quarter, and more backward production capacity will be shut down by the fourth quarter. As of the end of June, the total production capacity of the six PTA units under 1 million tons in China that were still in normal operation was 3.375 million tons, and the average production capacity of the six units was 560,000 tons. They are all small units with high energy consumption, and the pressure for parking will gradually increase in the future.
Demand end: The profits of the polyester industry chain are concentrated at the downstream polyester end, and the pulsed high production and sales ensure that the inventory pressure of finished products in polyester factories is still within control. Within the second half of the year, the average monthly operating load of polyester is expected to remain at the highest point in the same period in the past four years, and the demand for PTA is stable. At the same time, precisely because of the limited variables on the demand side, its influence on the PTA market has weakened.
Taken together, high oil prices support PTA prices in the second half of the year, but overcapacity is negative for PTA market prices. It is estimated that PTA prices may rise first and then fall low in the second half of the year. Low processing fees will accelerate the elimination of backward production capacity. There will be very few PTA devices left with a single production capacity of less than 1 million tons, and the concentration of the PTA industry will increase.
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